Fairfield v. Day , 71 N.H. 63 ( 1901 )

The contention of the defendant is that his contract in respect to the payment of the outstanding bills was one of indemnity merely, while the contention of the plaintiff is that it was one for the unconditional payment of liabilities. There being a well-settled distinction between an agreement to indemnify and an agreement to pay, it is necessary in the first instance to determine the nature of the contract upon which this action is founded.

The contract speaks for itself. By it, and for a valuable consideration, the defendant, among other things, "was to pay all outstanding bills due on account of the business," among which were the claims which are now sought to be recovered. This language is plain and unequivocal. It admits of but one construction. In common understanding and in legal effect, the defendant undertook and agreed "to pay all outstanding bills due on account of the business" as his own proper debts, and not merely to indemnify the plaintiff against them. In such a case, a recovery may be had as soon as there is a breach of the contract, and the measure of the damages is the full amount of the accrued liability; whereas in contracts of indemnity the obligee cannot recover until he has been actually damnified, and then only to the extent of the injury sustained by him up to the time of the institution of his suit. Wicker v. Hoppock, 6 Wall. 94; Jackson v. Port, 17 Johns. 482; Locke v. Homer, 131 Mass. 93 (41 Am. Rep. 199), and authorities cited; Pierce v. Plumb, 74 Ill. 326; Thompson v. Taylor, 30 Wis. 68; Smith v. Railway, 18 Wis. 21; American, etc., Ins. Co. v. Fordyce, 62 Ark. 562 (54 Am. St. Rep. 305), and authorities cited; Gilbert v. Wiman, 1 Comst. 550, — 49 Am. Dec. 359, and note 362, 363; Churchill v. Hunt, 3 Denio 321. The plaintiff is therefore entitled to recover the amount of the judgment of the Shepard Morse Lumber Company against him, and also the amount of the A. C. Dutton Lumber Company claim, with interest upon both from the date of his writ.

The remaining question is whether he can also recover his counsel fees in the suits against him upon the bills which the defendant had assumed and agreed to pay.

To entitle the plaintiff to recover the items of counsel fees, they must have been incurred in good faith and have been the natural and reasonably necessary consequence of the defendant's negligence or wrong. Chase v. Bennett, 59 N.H. 394, 395, and authorities cited. Both of these requisites sufficiently appear in the present case; and it also appears that the defendant had knowledge of the suits in which the counsel fees were incurred. But, in addition, it must further appear that he was notified to defend the suits and refused to do so. Ib. 395, 396. Such notice not having been given, the items of counsel fees must be disallowed for this reason. Whether they might not also be properly disallowed upon other grounds, and especially because they were incurred by the plaintiff in suits against him upon his own contracts (Westfield v. Mayo, 122 Mass. 100,105, 109; Reggio v. Braggiotti, 7 Cush. 166), need not now be considered.

Case discharged.

WALKER, J., did not sit: the others concurred.